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2018 (12) TMI 474

Composite supply or not - Bundled services - principle supply is exempt supply - Health care services - inpatient services - outpatient services - input tax credit - Held that:- Since the healthcare services are exempt from tax under section 11, the same are exempt supplies. But the definition of taxable supplies includes those supplies of goods which are leviable to tax and chosen to be exempted under section 11 and hence the exempt supplies also fall under the category of taxable supplies and hence the supply of goods and services supplied by the applicant company in conjunction with the healthcare services fall under the definition of “composite supply” as the services of supply of food and medicines to the patients are as advised by the doctor or nutritionists. But in case where the supply of food is not as advised by the doctor or nutritionists and is supplied to the patients, then such supply of food cannot be treated as “naturally bundled” supplies and supplies made in conjunction with each other and hence are separate supplies and needs to be treated not as composite supplies - Medicines supplied to the inpatients - Held that:- They form part of the healthcare services .....

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- The applicant is eligible -to claim credit of input tax credit only on for such taxes paid on the inputs, input services and capital goods which are attributable to the supplies of goods or services which are taxable under the provisions of the Central Goods and Services Tax Act, 2017 and not attributable to exempt supplies of goods or services under the Central Goods and Services Tax Act, 2017. - AAR No. KAR ADRG 26/2018 - Dated:- 13-11-2018 - SRI. HARISH DHARNIA, AND DR. RAVI PRASAD M.P. MEMBER Represented by Sri Naveen Rajapurohit, Chartered Accountant ORDER UNDER SUB-SECTION (4) OF SECTION 98 OF CENTRAL GOODS AND SERVICE TAX ACT, 2017 AND UNDER SUB-SECTION (4) OF SECTION 98 OF KARNATAKA GOODS AND SERVICES TAX ACT, 2017 1. M/s. Columbia Asia Hospitals Private Limited, (called as the Applicant hereinafter), having its registered office at The Icon, 2nd Floor, No.8, 80 feet Road, HAL Ill Stage, Indiranagar, Bengaluru 560075 has filed an application for Advance Ruling under Section 97 of CGST Act, 2017, KGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of ₹ 5,000-00 each under the CGST Act and the KGST Ac .....

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ital staff. d. With respect to health care services provided by the applicant company to in-patients, Company also provides food and medicines which are provided in conjunction with health care service. Under the pre-GST regime, the applicant company was not required to discharge the service tax liability as Healthcare service was exempted from service tax vide Mega Exemption Notification No. 25/2012- Service Tax dated 20.06.2012. However, the applicant company was discharging VAT liability on medicines provided to both in-patients and out-patients. e. The applicant has taken support of the provisions of section 7(1), section 2(30), section 2(47) of the Central Goods and Services Tax Act which define the supply , composite supply and exempt supply and states that as per entry no. 74 of the Notification No.12/2017 - Central Tax (Rate) dated 28.06.2017, healthcare services are exempted from GST. However, supply of medicines (pharmacy), consumables and supply of food are taxable at different rates under GST. f. With these facts, the applicant has sought an advance ruling on the matters already enumerated above. 4.1 The applicant states that as per definition of composite supply , it c .....

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ch are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person . Thus, the applicant claims, it can be concluded that there is no bifurcation made under CGST Act between input tax credit availed on inputs, input services and capital goods. 8. Further, as per Section 17(2) of the CGST Act, Where the goods or services or both are used by the registered person partly for effecting taxable supplies, including zero-rated supplies, under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies . Thus, as per section 17 (2) read with section 16(1) of the CGST Act, one can infer that, a restriction has been imposed on the registered person not to avail the credit of CGST paid on procurement of inputs, input services and capital goods which are attributable to supply of exempted services. 9. Based on the facts above, the applicant requests this Authority to clarify if,- 1) the Healt .....

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sideration in the course of or furtherance of its business and hence the supply amounts to Supply under section 7 (1) of the Central Goods and Services Tax Act, 2017. 11.2 Sub-section (30) of section 2 of the Central Goods and Services Tax Act, 2017 defines Composite Supply as under: (30) composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. The definition of composite supply must be read with the definition of taxable supply and exempt supply. Sub-section (108) of section 2 defines a taxable supply as under: (108) taxable supply means a supply of goods or services or both which is leviable to tax under this Act; Sub-section (47) of section 2 defines an exempt supply as under: (47) exempt supply means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply; .....

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The applicant has raised a question on valuation of the items of medicines and food and drinks when they form a part of the composite supply, the same needs to be answered as under: (a) In case where the medicines and articles of food and drinks form part of the single price including the supply of healthcare services, then there is no need for separate valuation of the same; and (b) In case where the same do not form a part of the composite supply but still are supplied for a single price, then they would constitute a mixed supply and the entire price received would be liable to be taxed at the highest rate applicable to the goods or service supplied as per section 8 of the CGST Act, 2017. The sub-section (74) of section 2 defines a mixed supply as under: (74) mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Even here, there would not be any question of valuation of supply of medicines or food or drinks as they are supplied at a single price. (c) In case where supplies of medicines, food and drinks .....

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